Where is the thermostat on a 1998 Subaru Forester?

Thermostat is located on the engine end of the lower (yes, I said lower) radiator hose. The housing is plastic, so work carefully. It would be a good idea to use a genuine Subaru thermostat and rubber O-ring gasket, as this will give the correct temperature. I am surprised your thermostat went bad-- usually the factory Subie thermostats last 10-15 years. To replace thermostat, drain radiator, then remove lower hose at engine end (first green shower), remove the bolts securing the lower hose connector to the engine and remove the connector (second green shower), then pull the thermostat and rubber ring out with pliers (third green shower). Installation is reverse of removal, and there is no gasket on the thermostat cover to speak of-- the O- ring around the thermostat does all the sealing. Remember to refill radiator with care, and use the air "burp" screw mounted on the radiator top, opposite the fill pipe.